House Price Growth Eased in March. Is a Cool-down Imminent?


Home sales in Canada fell in March, while the pace of price growth eased, potentially signalling the start of a slowdown as interest rates trend higher.

Home sales were down 16.3% compared to last year’s record high, falling to 55,000 units, according to data from the Canadian Real Estate Association (CREA).

Meanwhile, the average home price came in at $796,068, down 1.5% from February, while year-over-year price growth eased to 11.2%, down from the annualized 20.6% rise seen in February,

“While the market remains historically very active, March definitely saw a slowdown compared to February in terms of both activity and price growth,” said Jill Oudil, Chair of CREA. “One month does not make a trend, so we’ll have to wait and see if this is the beginning of the long-awaited cooling off of this market.”

The MLS Home Price Index, which removes some of the volatility from seasonality, recorded a month-over-month gain of 1%⁠—slower than the 3.5% pace seen in February⁠—and was up 27.1% compared to a year ago (vs. the 29.2% annualized increase recorded in February).

The number of months of inventory rose to 1.8, up from its all-time low of 1.6 over the past three months. The long-term average, however, is over five months.

CREA noted that about two-thirds of local markets are considered to be “seller’s markets” based on the sales-to-new listings ratio. The other third of markets are in “balanced market” territory.

Removing the high-priced markets of the Greater Toronto and Vancouver areas, the average price stands at $633,068, which is $76,240 higher than a year ago.

Cross-country roundup of home prices

Home prices continued to rise in most regions, although the pace of growth was slower compared to what was seen in February. In the past month, average prices increased by $36,000 in the Greater Toronto Area (vs. $80,000 in the previous month), $47,100 in the Greater Vancouver Area (vs. $58,200), $17,800 in Barrie, ON, and district (vs. $60,300), $20,200 in Ottawa (vs. $40,600) and $19,400 in Calgary (vs. $25,200).

In other markets, particularly Atlantic Canada, home price growth remained strong. Year-over-year, prices were still up 37% in Halifax, NS, 31% in Fredericton, NB and 29.5% in Saint John, NB.

Here’s a look at some more regional and local housing market results for March:

  • Nova Scotia: $390,200 (+37.4%)
  • Ontario: $1,052,920 (+18.3%)
  • B.C.: $1,089,600 (+15.2%)
  • Quebec: $499,209 (+14.7)
  • Alberta: $472,746 (+7.1%)
  • Halifax-Dartmouth: $493,200 (+37%)
  • Barrie & District: $958,400 (+35.6%)
  • Greater Toronto Area: $1,376,000 (+34.8%)
  • Victoria: $978,300 (+28.7%)
  • Greater Vancouver Area: $1,360,500 (+20.7%)
  • Greater Montreal Area: $562,500 (+18.4%)
  • Calgary: $503,400 (+17.3%)
  • Ottawa: $750,500 (+14.1%)
  • Winnipeg: $348,900 (+13.5%)
  • Edmonton: $364,400 (+9.3%)
  • St. John’s: $289,900 (+9.2%)

Are rising interest rates already having a cooling effect?

As CREA Chair Jill Oudil noted above, one month does not make a trend. However, observers suggest rising interest rates could already be having an impact on homebuying trends.

Fixed mortgage rates have already surged roughly a percentage point to the 4% mark over the past couple of months, while the Bank of Canada has now raised its benchmark rate by 75 basis points, sending prime rate, and variable mortgage rates by extension, higher.

“While buyer’s fatigue likely played a role in cooling sales in March, interest rates also increased quite significantly,” noted TD economist Rishi Sondhi. “And, with the Bank of Canada set to hike rates aggressively, home sales are likely to trend even lower moving forward. This should help balance the market and weigh on home price growth.”

National Bank of Canada economist Daren King agrees, but said the housing market should remain strong through the spring since many buyers still have competitive rate holds in place.

“In our opinion, the housing market should remain active during the spring due to many people who have secured advantageous interest rates and [who] will want to act before the end of their interest rate guarantee,” he wrote. “However, with the recent increase in mortgage interest rates and the worst affordability conditions on record, we expect the residential market to slow down in the second half of the year.”



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